Today, President Obama signs the JOBS Act into law,
legalizing crowdfunding in startups by non-accredited investors, so
that anyone and their mother can invest. The new law stipulates that
entrepreneurs can now raise money from any and all, however, startups
are limited to $1 million per year, and must stick to portals approved
by the Securities and Exchange Commission. What’s more, the legislation
dispenses with the 500-shareholder rule, which put a limit on the number
of shareholders a company was allowed before registering with the SEC
(and going public).

The new law gives high-growth companies a longer grace period, or
on-ramp, leading up to IPOs, and lifts some of the one-size-fits all
regulation that likely has been hampering the IPO market. While this is a
big win for startups, it puts significant pressure on the crowdfunding
market to self-regulate — which is risky. That’s why 13 equity and debt
crowdfunding platforms and insiders have come together to form a
leadership group to bring attention to the need — really, requirement —
for the industry to develop effective self-regulation, best practices,
and investor protection.

As the JOBS Act requires all crowdfunding sites to be members of a
national securities association, the group is on a mission to find the
best way to do that in a way that encourages the new industry while
protecting investors. The "leadership group” is to include members of
the crowdfunding industry, (duh), who will be working in collaboration
with legal, securities, and SEC experts — many of the same people who
helped push the JOBS Act forward.